TAXES

Posted by Henry under PROFITS, TAXESComments Off on ASIAN TYCOON ESCAPES PAYING HUGE TAXES ON PROFITS IN AUSTRALIA

One of Asia’s richest tycoons has avoided tax on tens of millions of dollars in profits from Australian property deals over the past two decades.

Onn Mahmud – brother of the billionaire chief minister of Sarawak in Malaysian Borneo – has used an elaborate global financial network to export his earnings from a portfolio of Sydney commercial and residential properties worth an estimated $100 million.

In one deal, Mr Onn sold an apartment development site in Potts Point for $15.5 million in 2007, realising a profit of $10.8 million.

Farok Abdul Majeed, who is suing Mr Onn for the $5 million he claims he is owed. Photo: Supplied

A former senior business associate of Mr Onn said no capital gains tax was paid on the deal and all of the proceeds were repatriated to a trust based in the Cayman Islands.

”All his operations were carefully structured to ensure that he paid no tax in Australia,” said Farok Abdul Majeed, who ran Mr Onn’s Sydney property deals for several years.

Mr Onn’s wife and children live in a mansion in Carrara Road, Vaucluse, with sweeping harbour views, but he spends most of his time in Singapore and Malaysia.

Documents obtained by Fairfax Media indicate that Mr Onn gave conflicting information to authorities to secure an Australia business visa and build the property portfolio he ran through Cayman Island trusts managed by merchant bankers Merrill Lynch in the Isle of Man.

Mr Abdul Majeed is fighting to recover millions of dollars he claims to be owed in unpaid fees, commissions and expenses. Leading architects Crone Partners also claim to be owed more than $500,000 for professional services.

Mr Onn is reported to be the second richest person in Malaysia with a fortune of more than $2 billion, most of it drawn from deals involving timber exports that have decimated the tropical rainforests of Sarawak. His 2002 business visa application was sponsored by Ryan Park Limited and three associated companies he and his family controlled, Ferncroft Limited, Golden Arrow Limited and Cherry Blossom Limited. In the application, Mr Onn said Ryan Park and the other companies had invested more than $50 million in Sydney real estate. Mr Abdul Majeed said he believes Mr Onn’s total property investments in Australia were double that amount.

Ryan Park’s ABN registration describes it as an ”Australian private company” but it has no record with the Australian Securities and Investments Commission and was registered in the Cayman Islands in 1991 as a ”non-resident” entity.

In March 2007, executives of Merrill Lynch swore in a statutory declaration in the Isle of Man that Ryan Park was ”an unregistered foreign company” that ”does not carry on business in Australia”.

Ryan Park – and the three other companies also registered in Cayman Islands – were struck off the Islands’ company register several years ago.

The property portfolio assembled by Mr Onn between the early 1990s and 2007 included a hotel and restaurant complex in central Sydney and an office building in Elizabeth Street sold in 2005 reaping a profit believed to be more than $5 million.

Mr Abdul Majeed said that when the site in Wylde Street, Potts Point, was sold in 2007, the proceeds were repatriated to a Cayman Islands trust whose beneficiaries were members of Mr Onn’s family.

The unrealised plans to build a luxury apartment tower on the Potts Point site made it, for a while, the talk of the town. In 2008 a duplex penthouse was sold off the plan for a record $20 million.

Mr Abdul Majeed, a Malaysian-born property development and project management consultant, has resumed legal action to recover more than $5 million he claims to be owed by Mr Onn.

In August 2007, a NSW Supreme Court judge ordered Mr Onn to pay $2.2 million to Mr Abdul Majeed for outstanding fees and commissions. The order was discontinued after he failed to appear at a subsequent hearing at which the order was challenged by Mr Onn’s lawyers.

Mr Onn did not respond to a series of questions from Fairfax Media sent last week to his Singapore lawyers.